WCA November 2014

From the Americas that a Tesla died 12,000 miles into a 15,743-mile test run, requiring a ‘hard reset’ to restore most of its functions. The trim panels had to be replaced to fix a creaky noise coming from the roof. Multiple other parts also required replacement. (‘Tesla Hit By Another Harsh Review,’ 12 th August) By the time Consumer Reports weighed in, CEO Elon Musk of Tesla Motors had responded to the Edmunds assertion of a frequent need for both hardware and software fixes to the Model S, insisting that the policy of the company’s service department is to err on the side of caution in unnecessarily swapping out parts. Mr Kaufman pointed out that when, two years ago, Consumer Reports lavished praise on the Model S, the only real concern it expressed was about the feasibility of driving the car long distances. Even so, he wrote, Tesla’s stock price soared in the months that followed, outpacing those of its older auto industry rivals such as General Motors, Fiat, Ford, Daimler and Toyota. With the increasing number of supercharger plug-in stations across the USA, the problem of long-distance driving has been addressed. But, Mr Kaufman wrote in August, “Tesla just got another dent.”  In other news of Tesla Motors, the company announced that, together with Panasonic, it will build a large-scale plant in the USA which by 2020 will employ 6,500 people in producing batteries for Tesla’s all-electric vehicles as well as modules for the stationary storage market. Its intention, Tesla said, is to reduce the costs of making battery packs, enabling the company ‘to meet its goal of advancing mass market electric vehicles.’ Currently, the requirement for large batteries tends to price electric cars out of a market dominated by conventional gas-powered models. For the projected ‘Gigafactory’ – plant and associated supplier complex – Tesla will ‘prepare, provide and manage the land, buildings and utilities’ as well as assemble the battery packs. Panasonic will invest in machinery and tools and manufacture and supply the lithium-ion cells needed for the batteries. Yoshihiko Yamada, Panasonic’s executive vice president, said in an accompanying statement on 31 st July that the Japanese company believed the joint project would ‘accelerate the expansion of the electric vehicle market.’ So far, that effect has eluded Tesla, which according to Autodata sold only about 1,500 cars in June and 9,100 in the first half – totals up by only a little from those periods of 2013. General Motors tries to rise above its financial woes, but substantial fines and criminal charges may lie ahead A second-quarter earnings report from General Motors Co recorded a drop of about 85 per cent in the quarter,

mainly the result of the automaker’s recalls of defective small cars, begun in February. A $400 million charge was taken to compensate those affected by faulty ignitions that can cut engine power and disable air bags. The disclosure marked the first time GM had specified the expected cost of such compensation, a total that it said could grow. The report, published 24 th July, indicated that GM – after issuing 60 long-delayed recalls and accumulating $3.8 billion in costs for vehicle repairs and payments to accident victims – was trying to confine as much as possible of the financial damage to the first half of the year. The company also took an $874 million charge to cover future recall costs. The two charges came on top of the $2.5 billion already spent on recalls in 2014. But GM – the world’s second-largest automaker by sales, after Toyota of Japan – still faces significant potential liabilities. In a federal filing, GM said that 45 state attorneys general were investigating the company’s failure for years to fix defective switches that it had tied to at least 13 deaths and 54 accidents. In addition, more than 100 class-action lawsuits have been filed against GM in the USA and Canada, and investigations by the US Justice Department and Securities and Exchange Commission (SEC) could prompt substantial fines and criminal charges.  Ironically, for a company with safety-related problems on such a scale, General Motors fielded the only entry in a small-car test group to earn a 2014 Top Safety Pick+ award from the US Insurance Institute for Highway Safety (IIHS). But this certifiably safe car – the Chevrolet Volt, which has a basic-rated optional forward collision warning system – is unlikely to recoup GM’s fortunes. Sales numbers for the Volt dropped 12.6 per cent to 8,615 in the first half. “No one could say it is any more than a niche product,” said Douglas A McIntyre on the financial news site 24/7 Wall Street , recalling that the Volt was introduced in 2007 as a key to GM’s future. But issues with battery fires in 2011 made the car a public relations nightmare for the company – a harbinger of worse to come. “There is no way back to success for the Volt,” Mr McIntyre wrote (30 th July). “It has fallen much too far behind in the market for electric engine cars.” Elsewhere in automotive . . .  No longer challenged by excess capacity, auto suppliers in the US are now facing the demands of a recovering industry, David Andrea, senior vice president of the Original Equipment Suppliers Association, said at a 7 th August management briefing seminar in Michigan. With so many vehicle and parts launches this year, automakers and suppliers need each other, Mr Andrea told business writer Alisa Priddle of the Detroit Free Press .

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Wire & Cable ASIA – November/December 2014

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